tv Bloomberg Daybreak Europe Bloomberg September 5, 2017 1:00am-2:30am EDT
♪ more purityg for donald trump agrees to support billions of dollars in new weapons sales to south korea as the u.s. ambassador to the u.n. steps up the rhetoric against kim jong-un hundred manus: the countdown begins. u.s. congress gets back to work with just a few weeks to pass a spending bill. anna: adding urgency to brexit. littletions get a headway. theresa may is set to deliver a speech on september 21. ♪ anna: welcome to "bloomberg
daybreak: europe." we have a stacked up show to you today -- for you today. our guests include john redwood and charles stanley. -- at charles stanley. we have a ceo joining us for an exclusive interview. we will talk about brexit. manus: let's talk about the market. you are seeing yuki equity futures getting higher. -- u.k. equity futures getting higher. the havens are strong your -- the havens are strong. the yen is up for the second day. it is up point 1%. -- it is up .1%. the white line is the swiss franc. you are seeing the haven
potentially of choice. it seems to be getting popularity. one week volatility climbing above the yen. think about japan, the proximity to real or threatened danger. for perhaps raises the risk yen versus the swiss franc. where do you want your haven of choice to be? anna: does the yen lose a little bit of its glass as a haven? haven?s as a in all talk to jane foley moment about that. a slightly odd trading session. people said it might take some time to unwind political tension as expressed in monday's market. this is the risk radar for you. this is what we see across the asian session. the u.s. futures point down, no surprise. , it couldan futures
be a little bit stronger. asia was mixed. gold, up .2%. manus: you are seeing money going into gold. gold is outperforming relative to swiss franc and the yen. 1350.uld break whose nerves will break first when it comes to north korea? a little bit more than nurse at this stage. anna: we have a nice line about global risk for appetite.
let's have a look at the bloomberg first word news. a senior european lawmaker has said september 21 might be the date theresa may gives an anticipated speech to step up brexit negotiations. others say the date is wrong. meanwhile, post-brexit trade deals will begin with south korea because of how much they contribute to the u.k. economy. that is according to official. the u.s. house of representatives will vote wednesday on a harvey hurricane relief deal. won't combineders legislation which would raise the u.s. debt ceiling. the deal would provide for a most $8 billion in aid. australia's central bank has
held interest rates, choosing to rely on lending curbs. left rates unchanged since last august. plans are signaled to withdraw stimulus. kenyans will draw -- will vote in a new election on october 17 between the kenyan president and the former prime minister, the only candidates. trump points to and an obama era program venting the debilitation of immigrants illegally brought to the country as children. the move will put a million people who consider themselves americans in legal limbo. latest private gate of
china's economy saw an uptick in august. up froming of 52.4 was the previous month. a reading above 50 shows an extension. growth accelerated to a three-month high. the chinese president has called for support for multilateral global trade system. he was speaking to leaders at a summit. he also called for innovation in emerging economies. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . still a bit of a risk-off segment in asia. the nikkei is down. treasuries also moving higher. the hong kong market is quite well bid today, up .25%.
the asx 200 fairly flat. you have seen a goodbye coming through for mining stocks. down .3%. rise inseen lg shares seol -- in seoul. this is the most the export story you are seeing in tokyo on that stronger yen. this shows the dilemma the rba is facing in terms of leaving that rate on hold. there could be a rate hike from the rba next year, and you have unemployment flattening, wages down, and household dips.
watch out for word from the rba governor. he will be speaking later tonight and try to talk down that. manus: thank you very much. a bit of breaking news coming through. a listing from the maker of angry birds. they are going to list on the .asdaq and pay out a dividend they out of 30% dividend. the capital they are planning to issue, about 30 million euros. i like the sound effects. anna: it has been a fascinating journey. they had great success early. now we are talking about this ipo. got,ost recent update we
increased sales. the company has been getting rid of headcount and changing its strategy, bringing and others, stop, merchandising -- staff, merchandising. the update on that story. forpo we have been waiting for quite some time. agreed to support billions of dollars in new weapons sales to south korea after the north nuclear test of the we can. said the u.s.aley would seek the strongest possible sanctions against the rogue state. powers understand the responsibilities. tim dongguan shows kim jong-un shows no such understanding. -- kim jong-un shows no such
understanding. his actions show he is begging for more. a peaceful resolution was called for. >> the situation on the peninsula is deteriorating, falling into a vicious circle. the peninsula issue must be resolved peacefully. china will never allow chaos and war on the peninsula. meeting, ar the report came out that north korea was preparing to launch another missile. north korea is raising the stakes again ahead of another significant date in their calendar. what is the latest and what makes us think this is escalating again? it's interesting you put .hose two soundbites
south korea is in the middle of that. they are leaning towards peaceful negotiations and more pressure on the military front to try to at least get north korea on the table to negotiate some type of peace. we are learning from local reports that pyongyang may be moving this internet -- intercontinental ballistic missile sooner than expected. we were eyeing for september 9. reports say it could be earlier. the significance is we have seen before that north korea likes to these dates. it looks like they are quickening their pace according to intelligence officials. it looks like they are moving this ballistic missile away -- i should say toward a nuclear test site starting monday night.
just a day after they conducted this nuclear test, the sixth we have seen, the most powerful. the development of coming hours after we learned the u.s. had a ,hone call with president moon aiming to flex their military muscle to north korea. anna: the response from south korea, you suggested some of it. they have gone support from president trump in a sense of supplying further weaponry. >> that is right. what we have from the defense ministry distorting, they had a meeting and updated the media saying what they are looking for is all options are on the table, including military. they are keeping quite a wide range at this moment, but also
some confusion in the messaging they sent out yesterday when they raised the possibility of possibly bringing in u.s. nuclear weapons back into the korean peninsula, which would -- which we have not seen in nearly four decades. the defense ministry coming out and saying our denuclearization policy in the region still stands, but their military taking this quite seriously in the latest developments. the navy has begun these live fire drills involving 20 vessels in total. those are going to be continuing through saturday. could see a full installation of these anti-ballistic missile defense launchers sometime soon. manus: thank you very much. jane foley joins us this morning. welcome. look as though
they are flexing muscles. there is an agreement to do more with warheads. bit by are little security, in fact there is an adverse outcome and we are not prepared for it. our markets really prepared for a tail risk event? jane: no. what we see in markets is a lack of panic. marketsovement, but the hope there might be some sort of agreement. there were some covering of positions, but on the other hand -- markets have been it appetite for risky markets. view -- point of
in the foreign exchange world, those two currencies are the top two in terms of safe even. the swiss bank is probably be better one, i would argue, but the central bank says it could intervene. the japanese are very unlikely to do that. manus: let's talk about the japanese. if you look at the japanese ds, they have gone negative. this could provoke the bank of japan to have to do something more aggressive than they currently are doing. jane: possibly. it depends how long it lasts. if we were in the situation a year from now, i think that discussion is very valid, but right now it is unlikely they will take any knee-jerk reactions. they know it can be a waiting game. .hey are doing a huge amount
what they are doing already is huge, but when it comes to buying safe havens, they are not worried about return. you just want to know they can get their money back. anna: we will talk more about china and emerging markets as we go through the program. in terms of relationship to the , thesestates and china two global superpowers, is that changing materially for you in a way that makes you rethink dollar, re-think yuan? jane: not yet. you are quite right. the relationship between -- if we take the situation in north korea, it is about north korea, china, and the u.s. there is an important triangle here. how that evolves will impact the markets. manus: certainly more pressure brought.
some headlines coming through from south korea. to confirmclining the reports of icbm. there is going to be this push and pull on the ground that there is this tension right and -- right up until september 9. hopefully there is some major decision between china and the united states. we looked at some of the details. 90% of north korea's trade with china in 2016. china does not want to risk cutting off oil to north korea, because they then face a major key military and issue. this is the trading relationship. in termsee it is china of the imports from north korea, up by 60%. they do not want to bring this fully to bear on north korea, do
they? jane: that is a difficult situation. they have heavy pressure from the u.s. to do more in terms of trade. china was not the only country doing trade with north korea. the list that were published and aly, we have france couple other western countries. clearly, there are other avenues, but what direction does china take? anna: interesting. mickey haley was saying yesterday that september 11, we get more details. up, north korean tensions. china's currency has been
anna: welcome back. this is "bloomberg daybreak: europe." xi jinping has a downward risk and uncertainty for the global economy is on the rise. manus: meanwhile, the offshore yuan is up for the 14th straight day in a row. that is the longest rally ever. china's currency is defining north korea's tensions. the rba has kept its key interest rate at 1.5%, the decision came as the central bank said a higher australian dollar is weighing on the outlook for output and employment. manus: jane foley has been sitting with us. she is a currency strategist at rabobank.
here is your offshore yuan. is that a haven currency? 7 know -- jane: no. manus: why is it up 14 days in a row? maybe people in china that had previously in the year, wanted to get their money out of china, they made be reconsidering given that -- they may be reconsidering given the tensions. the bloomberg copy this morning talked about speculation , the government trying to support the you want to make it a recipient of haven flows. importante is an political -- they want to window dressed the economy and have been doing that successfully. the currency as part of that. it would look good for them politically.
there might be less of a reason to push your money offshore, but you can't say it is a safe haven. manus: the rba left rates unchanged. if we look at central banks, bey possibly have reasons to more cautious i'm a little bit of -- more cautious, a little bit of pullback given the geopolitics. is that the norm? jane: in a scrimmage, there are a lot of commodities here -- in australia, there are a lot of commodities. prices, suchstrong as iron ore. the price of steel rising.
it has floated the australian economy. the rba is cautious about china. what is the credit stock in china? what is the economy slows -- what if the economy slows? from that point of view, they won't stop. one of the reasons is they don't have a lot of inflation. this is where they have a similar problem to the rest of the g-10. they have a low rate inflation. the end of last year, they were recording the lowest wage inflation ever, given their economy wasn't -- anna: they do so much. jane foley stays with us. -- thank you so much. jane foley stays with us. beus: donald trump said to
anna: welcome back, everybody. we are seeing money going into the japanese currency, some of the other safe havens also the what -- looking popular for a second date in a row following the activity on the korean peninsula. let's check in on the market action. nejra cehic shows -- joint this. nejra: we are seeing a second day of declines for asian equities, not quite as much as where we were yesterday, but they'll the msci asia-pacific index softer overall. you can see more industry groups in the red than the green. if we look at the industry distribution on the imac. some weakness in
japanese equities combat some gains on hong kong and china. aversion inome risk the asian session. taking a look at safe havens you are mentioning. you were talking about the yen. it has gained against the dollar, but this chart is showing the nominal effective exchange rate. been february 13, it has underperforming gold, that has risen more than 8% since the same date. gold seeming to be the preferred safe haven since mid-february. yesterday we saw gold outperform the yen and the swiss franc. it -- the spot price rose more than 1%. we were seeing demand for industrial metals. nickel hit a two-year high. copper keeps powering higher. this chart showing how hedge funds have waged there net long
positions to a record. this positioning with hedge funds means some investors iv looking to take profit on copper in the near future. -- means some investors might be looking to take profit on cooper in the near future. manus: top stories, the cover story is the bumper deal. the aviation deal with united technologies. they are buying rockwell collins for $30 billion. -- $423 billion. -- for $23 billion. anna: the next story is theresa may's big brexit speech at that may happen on september 21.
letdate may have been slipped, but it was refuted. they have made no secret of the fact that there will be a speech, but just the question of the day. september 21, will she or won't she? let's talk about the final story. the vast majority of the fund managers are not prepared to meet the next execution -- the best execution report requirements. that but -- the deadline gets closer. congress gets back to work
today. many people who consider themselves to be americans could find themselves in legal limbo. president trump is said to be looking to end an obama era program that prevents the deportation of immigrants illegally brought to the united states as children. manus: let's welcome kathleen hunter. jane foley is also alongside kathleen. the deferred action for childhood arrivals, just one of many challenges that congress has to deal with. be a million people potentially affected by trump's next move. kathleen: the important thing to remember is that the reason might obama did this executive these youngtect adults from deportation, shield from duplication is because congress could not act.
-- shield them from deportation is because congress could not act. there wasn't enough support to get through legislation to shield these dreamers. it would call it -- it was called the dream act. now we are seeing the trump administration trying to further , saying they are going to give congress six months to sort this out and after that we will end this program. ,ix months is not a lot of time given there has not been a lot of consensus on this. we look at the response we have had from other members of his own party. lindsey graham saying obama's buton was an overreach, also saying the immigrants it protects knows no other -- no no other country other than america. they are a knowledge and these
people have been brought up as americans. the other issue congress has to deal with is around debt limits. kathleen: this is not necessarily going to be a high priority of congress, as converse tends to act when they are under a deadline and there is a real pressure for them to do so. they have a lot of deadline pressure items when they come to town starting today. 12 legislative days between now and when government funding runs out at the end of the month. that is not a lot of time. they have to figure out what they are going to do about the debt limit, government funding. they have the pressure of trying to provide relief to the victims of hurricane harvey. that is something else they're looking to move this month. those are going to be higher priorities have a they have this hard deadline. manus: one final question.
who are his allies within congress? you say six months, but where are the allies of trump on this move? remember the thing to is that trump is not somebody that has spent a lot of time and energy in building allies in congress. he has been burning bridges. he goes to twitter. even his feud with mitch , whose support he is going to need to get these things done. he doesn't have a lot of allies in congress, but when it comes to this issue, there are republicans, people like lindsey graham, john mccain, those folks that were part of that backing 2012, 2013, there was a gang of eight that fought together.
these are the republicans that he is going to need to rely on to take the lead passing some sort of legislation. back to his arizona speech, john , these were the people he was insulting. see how much success he has in finding friends in congress. thank you, kathleen hunter. jane foley still with us. listening to that in-depth analysis on what is happening on capitol hill as we go back to business this week. the potentials, for shut down, that is really what is going to be taking your attention to my imagined during september. many opportunities for this to jump to the top of the headlines. jane: there is a sense of deja vu i'm a that if you look at some of the language from some of the credit rating agencies, it has been aggressive.
knowing there is just 12 legislative days until september 29 is a primary concern. the next week or so, those headlines will be noticeable. treasury bills for early october are being noted on. deals have risen in that area. the market to date hasn't been too worried about this yet. manus: you mentioned rating agencies. i want to get your opinion. i am mystified. , they cut thegs -- s&p global ratings, they cut --. i can't join the dots. what i am missing? -- what am i missing? jane: most people anticipate
there will be a compromise. it would be an a norma's to have the u.s. bond market suddenly -- it would be a enormous event to have the u.s. bond market suddenly in default. one of the stories we have in front of us this morning is that nobody doubts america will make good on its debts. if congress fails to lift the debt ceiling, technical default would be on debt -- on deck. jane: yes. anna: delay is not actually default. jane: this is what the market is anticipating, which is why you don't have panic. nobody is pricing in an actual defaults, which is why the
language seems so aggressive to us. the radically, if you get to a situation where there is an a default -- a default but nobody whereicipating come -- there is a default but nobody is anticipating it, -- anna: we would have to deal with harvey. manus: -- we have to deal with harvey. we have to deal with getting texas back on its feet. unemployment numbers are going to be skewed and all over the place along with inflation numbers. what does that do to the fed? should they be stoic and carry on as normal? see: we are beginning to estimates from economists noting there will be an impact. that suggests the fed should hold off.
if there is in effect, that is slowing down the economy. the market is not sold on the idea that the fed -- manus: december rate hike probability. 33.8%. that is not near enough for the fed. anna: if they don't want to .urprise the market it would be a surprise that 34%. jane: they have said they are going to hike three times this year. only 33% of the market believes that. ,f we look at the earnings data really benign earnings number. this is why the market isn't sold on the idea. because of bond deals being well, conditions are very lax in the u.s. despite the interest rate hikes.
if you have the suggestion that growth is going to slow down -- again.we are going down his is a double punch on the dollar. -- this is a double punch on the dollar. yields and the fiscal disharmony is another reason why the dollar is weak. monetary conditions, very loose, -- with inflation benign, anna: jane foley schleswig-holstein --jane foley stays with us.
the estimate was for half of 1% of a growth level. this was have had a break of a lifetime, which is a decline in their currency, because that euro is storming ahead. the estimate was for a growth rate of a half of 1%. a little bit weaker than originally anticipated. anna: let's get a bloomberg business flash. juliette: united technologies is to buy rockwell collins for about $23 billion. rockwell shareholders will get cash and stock. the deal, one of the biggest in aviation's history, will create an aircraft giant better positioned to withstand the squeeze from boeing company and airbus. schneider electric of france has
reached an agreement to take control of a company. the deal would effectively be a the britishover of firm. to agreement brings together software units. maker of angry birds is to list on the nasdaq helsinki. is planning a share issue of 30 million euros. that is your bloomberg business flash. theresa is planning a speech to jumpstart the so-called sluggish brexit negotiations. oning discussions forward britain's trading relationship with the e.u.
there was talk of the speech on september 21. anna: joining us now is john redwood. jane foley is still with us. john, a warm welcome to the program. tell us your thoughts on the progress you see being made on brexit talks, where we are versus where you thought we might be. john: there is a bit of modest progress on the second order detail. this is a potentially 90 month negotiation, so i wasn't expecting much progress by this stage. the european union has a habit of doing everything at the last minute. i think most of the markets and media are getting too preoccupied by all of this. i would say, talk about something else the next year while they sort some of the fundamental things out. i don't think we will get early
agreements on the big things anytime soon. manus: how close are we? , it isook at sterling under pressure. this prospect -- our lead story today is that theresa may will make a speech. is it enough to move the agenda forward in terms of creating a better impairment? it seems acrimonious right now. -- of creating a better environment? it seems acrimonious right now. john: i don't think you should say the stock market has soared because of brexit. i don't think you should say that sterling is primarily we could the euro because of brexit. i think you can explain currencies and economic movements by normal things that happen on a regular basis.
clearly, interest-rate differentials and sections of monetary policy and balance of payments variables are the main things that influence currencies. the euro is running a surplus. the united states is faster down the track to normalization and monetary policy. sterling has been caught in those pressures, and that would have been true with or without the brexit vote. global pressures a reflection of the brexit conversation? is a the uncertainty factor behind the weakness of the pound. there has been this rotational back into the euro. this is a option of the perceived political environment. this is a function of the perceived political environment.
if investors decide not to plug currency is suddenly vulnerable. this is what we are seeing with the u.k. take the australian dollar with the account deficit for years. when the investors don't want that currency, then it happens. that is what we are seeing. john: policy is a bit of that, but we have been rising against the dollar for part of this year, because the dollar has been weaker than sterling. everyone has gone down against the euro. this was frank is down against the euro. it is more a euro issue to explain what is going on than a sterling --
manus: one could safely say that -- une 22 john: the market has misjudged the vote. are moreof the trends difficult to explain in terms of brexit. they are easier to explain in terms of interest rate differentials and strengths of major currencies. manus: in terms of the brexit divorce bill in the transition period, for the market and for stocks, sterling, the market, those are two of the biggest contentious issues we have. do you think a transition period of two years, four years would be reason for businesses to adjust? what you think is pragmatic for supporting business and jobs for the market? john: it depends whether you need a transition period. you only need one if you are going from something you notice
something new you -- to something new. you can't negotiate a transition period until you have something you are transitioning to. one model is to have something probably the same as we have at the moment. that would be i think the united kingdom's preferred position. it may be the e.u.'s preferred position and 2019, but it will not be there preferred position for quite a long time. they seem to think britain was it more than they do. the other possibility is we trade with them through wto rules as we trade with the rest of the world at the moment where there will be tariffs on their agricultural products, for example, where they are big exporters of agricultural product into the u.k. they would face a tariff.
terms of trade deals between the u.k. and other parts of the world, there are some attempt by the u.k. government to replicate deals that exist between the e.u. in those places. disappointing in terms of creating new deals? john: it is just an understanding. where the e.u. has an agreement at the moment with a third country, then there will be two but they are both entitled to transfer that agreement to themselves. it doesn't require the agreement of the fair country. say youtry is going to cannot negate your existing trade deal. anna: thank you very much. redwood from charles
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across all your locations. hello, mr. deets. every branch running like headquarters. that's how you outmaneuver. manus: begging for war. donald trump agrees to support billions of dollars in new weapon sales to south korea as the u.s. ambassador to u.n. steps of rhetoric against kim jong un. anna: the countdown begins. a few weeks to pass a spending bill on u.s. debt. manus: urgency to brexit. theresa may is set to deliver a speech on september 21 as she aimed to advance the eu talks. ♪
manus: you are welcome to "bloomberg daybreak: europe." i am manus cranny. anna: i am anna edwards. it is 7:00 here in london. we are going to be sitting to your bogart. we need to get to some breaking news. we got breaking news on the m&a front. here entrance channel -- a trance channel announcing a combination in france. aviva group which is an engineering computer software design for engineering businesses here saying there will be a 550 million pounds of combination will take a 60% stake in the enlarged aviva group.
we have been telling the story overnight. there was a big deal that would value more than three early in pounds a year -- 3 billion pounds. the understanding overnight was there was support on the board that we can get a durham -- get a deal is earlier today. the deal from since about 1014 pence per share. the third time these companies have tried to bring themselves together, bring together to industrial software units that operates engineer projects. manus: that three-time courtship broke down. the size of the course in terms of doing the deal, putting them together, let's talk about markets and where we stand. you got london in the green. everybody coming back from labor day so you have equity futures playing catch-up. bond yields are lower in the
united states. there is a sense of concern and risk in the markets. you have got the rest of europe, the dax is going through rotation. it is just coming into the green. xi jinping spoke this morning. he spoke about the risks to the global economy and opposing protectionism. had services number in china. the data is battling with the rhetoric of north korea. anna: it is the geopolitical risk that does still hold over markets. we are seeing moves in the -- in terms of havens. asian equity markets not following for a second day -- not falling for second day. his story that took about investors knowing there is a huge tail risk out there that they are betting against it. that is why we are seeing some buying on this. we are seeing some buying of gold which is up .2%.
manus: where do you want to put money in your haven? i love what david lenox wrote this morning, whose nerves will break first? the united states? or china? these are new lows for u.s. government bond yields at 2.13%. anna: we are seeing movement into the haven did it is the yen and gold -- into the haven. it is the yen and gold. we are sewing you -- we are .howing you the 10 year yield manus: those are your markets p let's get across to juliette saly. just your markets. let's get over to juliette saly. juliette: theresa may wants to move the discussion to britain's future trading relationship with
the eu. were told the address would come on september 21. lands for trade deals will begin with switzerland and south korea because how much they just how much they contribute to the u.k. economy. -- how much they contribute to the kid economy. u.s. representatives will vote on really four hurricane harvey. republican leaders bowing to the demands of their most conservative members and will not combine legislation which would raise the u.s. debt ceiling. australia's central bank has held interest rates choosing to rely on lending curves. the rba has left rates unchanged since last august. concerns about weak wages and inflation.
kenyans will vote in a fresh election on october 17 with the privatet and the former just former prime minister are the only two candidates. the chinese president has said downward risks and uncertainties to the global economy on the rise. leaders at a summit in china, xi also called for reforms in emerging economies. the latest private gauge of china's economy saw an uptick in august. the rating of 52.4 when up in the previous month. a reading of about 50 shows an sectoron, growth in the accelerated to a three-month high. global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120
countries. you can find more stories on the bloomberg at top . fairly flat overall if you look at the msci asia-pacific index. nikkei off onthe the close at about .6%. australia's market, they are closing pretty flat after the that decision holding at 51.7 point level. elsewhere looking at the kospi, it is coming low today down at about .1%. display and electronics doing very well in seoul after an event. they showed off their led televisions. we are holding in hong kong a developer at stock is rising. ,long with its spinoff proposal up by 3.5% in hong kong.
it 1.5% -- ond hold at 1.5%. he do have unemployment flattening, which is going down, household debt going up. we will hear from governor philip lowe. he will be speaking later today. morey expecting to see signs talking about not only the economy and challenges the rba is facing but that stubbornly high aussie dollar which got close to 80 u.s. cents. anna: juliette saly joining us from singapore. donald trump agreed to support billions of dollars in weapons sales to south korea. manus: the un security council meeting yesterday, the u.s. ambassador nikki haley said the u.s. would seek the strongest possible sanctions against the rogue state.
>> nuclear powers understand the responsibility. kim jong un shows no such understanding. his abusive use of missiles and nuclear threats show that he is begging for war. anna: china's permanent representative to the united nations called for a peaceful resolution. >> the situation on the peninsula is deteriorating constantly as we speak, falling into a vicious circle. the peninsula issue must be resolved easily. china will never allow chaos and war on the peninsula. thes: after that meeting, north koreans were preparing to launch an intercontinental ballistic missile before it saturday. .ur man who was on the ground we just heard from the chinese and the u.s.. u.s. saying that north korea is begging for. the chinese really trying to
step the issue backwards. where are we as a stand in seoul this morning? yvonne: quite alarmed given these recent developments. according to the local reports, seems according to spy agencies here in south korea that they have been moving this icbm starting last night. a day after they conducted this and highest on sunday likelihood according to intelligence officials that they will be firing this before saturday which is the founding day of north korea. that is significant in itself. the timing of it all, how quick we are seeing things moving the last 48 hours. what makes this significant is that the pairing of these two events. if north korea can prove they are able to detonate a nuclear
weapon with a force six times greater than hiroshima, you pair that with a development of it icbm and the miniature weapon that will be up to be attached to that, that is quite alarming to intelligence officials. it shows that north korea would be able to engage and have a military strike that is targeted at them. that is where the concern is. that is what we are seeing, this remarkable advance in north korea's nuclear weapons. a lot of analysts out here saying it has been achieved. anna: what has the response been from south korea? they have the support from the trump
+++ phone call with president trump. the weight limits as well which the lifting of the restrictions has been quite significant. president trump allowing south korea to fit heavier weapons on its own ballistic missiles, lifting the restrictions we have not seen in 30 years. also allowing them to buy as many -- i guess it billions of dollars as the white house is said from the u.s. as well. that is quite significant, also showing military force as well. we learned the south korean navy has been conducting these live fire exercises involving 20 vessels in total. we are learning those drills are going to be happening throughout saturday on top of the potentially seeing more development here after it appeared the key admin state of hurdle to get full installation here. manus: yvonne, great work in seoul. john redwood is the chief global strategist at john sally. john, listening to yvonne and
the sound from the u.n., you have the u.s. ambassador to the men, the market take on this. they realize there are terrorists, they are relevant large desk there are taylor risks, they are relatively large . how would you a buys clients to prepare -- how would you advise clients to prepare? how serious is it to prepare for disaster? jonathan: your both giving an excellent rating as far as were the markets are. we don't think this is very likely that this is going to escalate into military exchanges. gamble that the market is currently taking. even north korea must understand that if they the literally started a war, it would finish very badly for them.
it would do a lot of damage to south korea but it would clearly be terrible for north korea as well because if america was attacked, america would respond which is what the trump rhetoric is trying to say. the market is saying we don't believe this is going to happen, that is like risky assets have held up pretty well. the are people out there that are more afraid -- there are people out there that are more afraid than the market average. there are always people who love gold. do you ask clients getting into some of those havens increasing exposure to those havens? we see what is playing out. john: no we are not. we are advising they should not -- there should not be a war and we could be wrong. we do think the risks are very low. if you thought there was good to
be major war, you would have to transform your plate portfolio. you would need to -- transform your complete portfolio. people have been buying sovereign bonds because they are word, but they are buying in on tiny yields. we do note that at some point those yields could go up because the main central bank's have told us they would like to get them up. this morningping talks with the risk to the global economy as being his opposition to protectionism. this begs thy neighbor policy. is that the biggest threat? what are the consequences on that portfolio? and: he is right to warn trying to raise a primitive trading nation -- raise a
primitive -- raise a preeminent trading nation. trump would like to reduce the american deficit and with china in his sights, i think she is more worried -- i think xi is more worried korea will turn into a big trade dispute. i am my friends watching the central banks evolve. their enormous scope to do good and have huge scope to do bad. anna: john, thank you very much for your time. hats but wearing that one for us today. ofus: coming up, the cfo purdom regard on how much
anna: welcome back. let's check in on the markets. european stocks there. we are expecting to see upside at the start of the trading day. the euro has pulled up .2%. it is the second day u.s. stocks will be playing catch-up a little bit. yields, 0.37%. the markets over the middle east. ,anus: somebody whoever poses it is juliette saly with your business flash. juliette: manus, united rockwellies is to buy for $23 billion.
united technologies says it is planning the debt issuance is with cash at hand. the deal will create an aircraft partner better positioned to withstand boeing and airbus. combinationup in a valued at more than 3 billion pounds. with snyderkeover earning 60% of the company. the agreement brings together to industrial software units which would help to design software units such as nuclear power plants. birds -- theangry maker of angry birds is planning a payout ratio of 30% of net profit. that is your bloomberg business flash. are: european companies
thinking that headwinds are clipping their results. it is trading near the highest levels since early 2015. manus: the world's second-largest consumer says revenue from absolute vodka and jameson whiskey will be worth less when converted from dollars. --ning us now is june bogart gilles bogaert. you did identify the euro as being a headwind. but my first question is very natural, are you doing more hedging? how far out are you hedged? what is the financial impact of the strong euro on your business and the consequences? euros: the strength of the which is an issue, we preserve -- we prefer to see strong dollar because we export many brands from europe over the world.
as a consequence, a weaker dollar is an issue. 1% has an impact of 17 million euros on our profit. ,nna: weak dollar strong euro have the moves been just enough for you to change business plans? change hedging strategies? gilles: after a few years we have lived with europe parity with the dollar between 105 and 160 so we are accustomed to it. buting can be to go option our main answer is a business answer. we are global company. we can himself currencies but we are focused on the organic growth of our is this. more countries are conjured into
it. manus: you have 13 major brands, 11 of those last year were in growth mode a lot of that came from innovation. what we want to know, we have seen the results but where is the innovation? what products are we going to see innovate the most on? presents 1%vation of top blame gross -- top plane gross. jimson is innovation is done in your barrels has done well in the u.s. it is priced at the higher-priced bunds so it is good for volumes. it is good for the margins because pricing is higher and it is good for equity because it strengthens the bond equity. we're absolut which is high in the vodka market.
many innovations which are coming powerful. anna: in terms of the two brands , what are you doing? the main issues linked to china and the u.s. was back the gross things to martel which is quite positive. as, we have a plan to improve the growth going forward. like every fashion, it came to an end. then is to be a stronger foundation for blended scotch to be stronger in china. it is going to start in the next few days peter manus: you mentioned scotch. the pound is getting -- few days. manus: you mentioned scotch.
the compound is getting -- is that accelerating your numbers for scotch? gilles: the weaker pound because of the brexit announcement and it is good news because the 25% of what we sell worldwide is coming from the u.k. 2% of the we sell sales within the u.k. that said we want to keep a strong pricing, we want to keep brands at the premium level and so it is not -- we won't -- we don't want to renovate the weaker pound into a price reduction. anna: thank you for your time. touching on a number of topics. mental just a benzema you are in terms of how you look a look just manus: just depends on where you are in terms of how you look at the markets. european open is up next.
guy: good morning. you are watching "bloomberg markets: european open." cash is about to open in europe. we'll bring you the first part of the day. i'm guy johnson. matt miller on assignment today. let's talk about what we're talking about. president trump agrees to back billions of dollars in new weapon sales to south korea. investors really see a military option is more likely after the north korean nuclear test? act to work. u.s. congress -- back to work.